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Free Slides from
Ed Dolan’s Econ Blog
http://dolanecon.blogspot.com/
The Economics
of a Soda Tax
Created April 13, 2010
Te...
Posting P100413 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
Tax Flavor of the Year: A Soda Tax
 Taxes go in ...
Posting P100413 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
Elasticity of Demand for Soda
 The effectiveness...
Posting P100413 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
Effect of a Tax on Prices
A soda tax has three ma...
Posting P100413 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
Tax Revenue
 The tax revenue received by the
gov...
Posting P100413 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
Deadweight Loss
A tax also produces a deadweight ...
Posting P100413 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
Negative Externalities and Social Cost
 If consu...
Posting P100413 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
Offsetting social cost with a “sin tax”
 A tax o...
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Posting P100413 from Ed Dolan’s The economics of a soda tax

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Posting P100413 from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/
Tax Revenue
 The tax revenue received by the
government is equal to the amount
of the tax multiplied by the after-tax
quantity (Q2)
 Other things being equal, less
elastic demand or less elastic
supply will increase the tax revenue
because there will be less change in
quantity sold

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